Quote: If, as the saying goes, justice is blind, the data would show little correlation between firms' political expenditures and their likelihood of being prosecuted. Instead, Correira found that "politically connected firms are on average less likely to be involved in an SEC enforcement action and face lower penalties if they are prosecuted by the SEC." Specifically, Correira discovered that firms that increased their PAC contributions by $1 million over five years ended up halving their probability of being prosecuted.

Yes, correlation is not automatically causation, yada yada, but that doesn't mean there isn't a causal relationship here. I guess it's possible one could argue that a company that increases its PAC contributions is somehow less likely to be also engaged in financial shenanigans, but I'm not sure anyone would actually buy that.

There are some other bits of data that don't speak particularly kindly to the motives of SEC folks, such as that old revolving door:

Quote: Data from the Project on Government Oversight has documented that since 2001, more than 400 former SEC officials filed disclosure forms documenting their plans to represent firms before the SEC. Correira's report shows that this revolving door also influences financial prosecutions, as companies that employ lobbyists who once worked for the SEC "experience a larger reduction in the probability of enforcement and in penalties than those that do not."

Of course, it might not be entirely the SEC's fault. As Correira suggests, the SEC may be responding to basic incentives itself, in noting that investigations and prosecutions of politically "friendly" firms may create "political consequences for itself and its budget." Sirota more or less got a former SEC official to admit that this all goes into the thought process:

Quote: In an interview with IBTimes, former SEC counsel Scott Kimpel acknowledged that the agency does have to weigh how to best maximize its limited resources.

"At the end of the day, the SEC only has about 1,000 enforcement officials, so they can't possibly go after every single case of wrongdoing," he said.

As Sirota again notes at the end of his article, this issue is not just for the SEC, but for other federal agencies as well, including the DOJ, which more or less admitted that it wouldn't prosecute Wall Street firms connected to the 2008 financial mess, because it might have "a negative impact on the national economy."

It's not clear how you directly solve this issue, but it certainly does seem like a very real problem. Between the revolving door and the power of campaign contributions, it's been quite clear for a long time that the government is not the people's representatives any more (if they ever were).